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New York: The After-effect of Increased Tax Rates on Cigarettes

03/22/13

Alongside with the common truth that New York has the highest tax rates on cigarettes in comparison with other US states it has also become the hottest place of smuggled cigarettes according to the recent data from Tax Foundation.

These are the direct consequences of rising taxes on cigarettes as people don't want to buy a pack of cigarettes for a crazy price.

Nearly 60% of cigarettes sold in New York are imported from the so-called 'black market' from other states. It is noteworthy that this fact doesn't influence anyhow the tax rate fixed per pack in New York all the same. Meanwhile the difference in price is tremendous. For instance, in comparison with Missouri where a pack costs just 17 cents, the price in New York reaches $4.35 per pack.
According to the recently published reports the considerable increase of smuggled cigarettes in New York and the increase of taxes have started since 2006. As New York Association of Convenience Stores mentions in the published report the persistent attempts to escape cigarette taxes cause the state losses in the approximate sum of $1.7 billion.

One of the authors of the mentioned report, Joe Henchman, expressed his own view of the situation regarding the 'cigarette black market' in New York. He said that in many cases illegal cigarettes are imported from other states where tax rates are much lower on them. The discussion runs about Virgina, for instance - one of the oldest tobacco producer where the tax rate per pack of cigarettes comprises 30 cents.

In rarer cases New York inhabitants try to falsify cigarettes stealing the tobacco trucks. Anyway, the current situation in New York is bound to attract the attention as sometimes the number of disadvantages can outweigh the number of advantages.